Argentina has given mining companies Vale SA (VALE3), Xstrata Plc (XTA) and Barrick Gold Corp. (ABX) 15 days to present plans to replace imports with goods manufactured in the country as the South American nation seeks to boost local industries.
“We need a strong mining industry, that generates development in the regions where it’s installed,” Production Minister Debora Georgi said today in an e-mailed statement after giving the miners the deadline at a meeting today in Buenos Aires. Pan American Silver Corp. (PAAS:US) and AngloGold Ashanti Ltd. (ANG) also participated in the meeting, according to the statement.
Argentina is seeking to reduce imports and control dollar outflows after the South American country’s trade surplus shrank in the past two years. In October, the government ordered miners and oil producers to repatriate export revenue.
The increase in so-called local content for miners will occur in two stages, according to the ministry statement. In the first, goods that are already produced in Argentina will replace imports, while in the second equipment and refining processes will be developed to increase so-called added value for the country. No time frame was given for the two stages.
In an effort to stem capital flight that almost doubled last year to $21.5 billion, Fernandez boosted oversight of the currency market starting the week after her October re-election. Cash-sniffing dogs were deployed at the main ferry terminal to Uruguay and she required all purchases of foreign currencies to have approval from the federal tax agency.
Vale said this month that it is revising plans to build a $5.9 billion potash mine in Argentina because it needs to assess “new elements” regarding the mine, Chief Executive Officer Murilo Ferreira said May 3.
Argentina last month nationalized 51 percent of YPF SA, the country’s largest oil company. The seizure was necessary to boost production after years of dwindling output under former controlling stakeholder Repsol YPF SA, according to President Cristina Fernandez de Kirchner.
A Vale official in Rio didn’t have an immediate comment about the measures announced today when contacted by Bloomberg News. Vale shares dropped 2.2 percent to 38.36 reais at 4 p.m. in Sao Paulo trading.
The Ministry’s plan is in line with Xstrata’s development at Alumbrera, Julian Rooney, an Xstrata executive in Argentina, said today in an e-mailed statement.
Officials at Barrick, AngloGold, and Pan American Silver did not immediately respond to messages from Bloomberg seeking comment.
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